Coinbase Chief Legal Officer Calls on Congress to Pass Stablecoin Legislation

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Paul Grewal, the top lawyer at Coinbase, has urged the US Congress to approve laws governing stablecoins prior to the upcoming Senate Banking Committee hearing on illicit financing, which is set for April 9th.

A Coinbase executive spoke on social media in response to written testimony from the US Treasury Deputy Secretary Adewale at a hearing. They urged Congress to pass regulations for stablecoins as soon as possible if they want to effectively address illicit financing connected to digital assets.

Willingness to Act Beyond Political Considerations

In addition, he pointed out that concerns such as setting rules for reserves and granting redemption privileges need not be contentious if all parties involved are committed to looking past political biases.

Wally Adeyemo, the Deputy Secretary of the Treasury, has shared his prepared statement for the upcoming Senate Banking Committee hearing on illicit finance. It’s evident that if we want to tackle the minuscule portion of such activities involving digital assets, it is essential to enact stablecoin legislation without further delay. (Paraphrased version)

— paulgrewal.eth (@iampaulgrewal) April 9, 2024

In his written statement, Adeyemo highlighted that terrorists have taken advantage of the decentralized system of cryptocurrencies for money laundering activities as mentioned in Grewal’s testimony.

Approximately five years ago, there was reportedly an occurrence involving al-Qaeda and related terrorist groups, primarily situated in Syria, who operated a Bitcoin (BTC) money laundering scheme. Based on the given testimony, these individuals allegedly relied on social media to solicit donations of digital currencies for their malicious activities.

Adeyemo revealed that one issue the agency encounters is how terrorists are growing more skilled at hiding their identities and moving funds through digital means.

Additionally, he pointed out that while the agency had effectively disrupted terrorist financing through conventional banking channels, these nefarious elements have turned to digital currencies as an alternative.

To prevent misuse of cryptocurrencies by harmful entities, Grewal proposed that enacting stablecoin regulations could significantly enhance the security of the crypto market.

Proposed Solutions and Coinbase’s Advocacy Efforts

Coinbase has been strongly promoting the need for regulation in the U.S. crypto market. In the past year, they have encouraged the Securities and Exchange Commission (SEC) to establish a unified framework for managing the creation and application of cryptocurrencies within the country.

Although the SEC-induced setbacks, there have been two legislative proposals presented by American politicians to govern stablecoin creators and the crypto sector as a whole. Yet, these bills have yet to advance substantially since their submission in the previous year.

During the hearing on Tuesday, Adeyemo has suggested several changes to tackle the issues of illicit financing. One of these suggestions is imposing additional penalties on foreign digital asset providers that enable illegal financing activities.

Adeyemo proposed broadening the scope of regulations to encompass virtual asset service providers (VASPs) and cryptocurrency exchanges. He advocated for clear guidelines on the authority to regulate digital asset transactions conducted outside the country.

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2024-04-09 17:24